7,00,00,00,000 Startup Failure 🔥| Tapzo Failure Case Study 🔥| Business Case Study in Hindi
You don't fail until you quit, Every Failure has a lesson. And if you don't quit then you aren't defeated. Friends we often fail in life. If we have any idea & things don't go according to plan then we feel very sad and we regret it so much. But your attitude defines that how your result is going to be in future life. Your attitude is very important. .
Jack Welch says that E + R = O This means your Response to Event decides Outcome. Friends all of us have used these apps like Swiggy, Zomato, Flipkart etc. and just think if all these apps come on the same platform then it will be great. You won't have to download all these apps, If there is a start up which will bring all these apps on single platform then that would be awesome. You would say such a start up would earn a lot, .
Its going to be fantastic but its not like that. Today we are going to talk about one such start up. Today I have brought a case study for you which is of a failed start up, its name is Tapzo. This start up was performing really well at once. They had achieved the valuation of $ 100 Million. & their performance was superb & they were growing. Mr. Bhuvan Bam had been their brand ambassador, you must be knowing him, buddy. .
And this start up was performing so well that everyone was liking this start up so much. One such idea, one such start up which had more than 95% chances of growth, what exactly happened with it that this start up failed so early. How did a start up worth Rs. 700 Crore shut down overnight? What were the reasons behind it? Why this start up failed badly that despite of being so good, people were hesitating to buy it? .
Today we are going to discuss all these things, so watch this video till the end. This start up was established in 2010 by founder Mr. Ankur Singla who had been CEO of the company and he had ran this company for long time. When he started, two more people joined him first was Mr. Vishal Pal who was CTO of the company, who handled all the technical side of the company. Then Avinash Venkadaru joined them who had big .
Role in growth of the company. Earlier Tapzo was named as Akosha which was actually a complaint management system which was managing the complaints of people. And they had raised nice funding worth $ 5 Million from Sequoia Capital, everything was going good, Then they pivoted their business in 2016 & formed Tapzo which is actually an app aggregator. They acquired around 5 million users within short .
Span of one and half years. If we talk about their team, about their timing then it was the best timing. Then they had received great funding as well. Their team was so fantastic that they didn't face any problems, still how did this start up fail? So the first reason is Frequent Pivots. They pivoted their business again and again, changed it again and again. It is better to dig a single pit of 100 m rather than 10 pits of 10 m each, .
You are more likely to find water with it. And they did not follow this principle at all. First came Akosha and then in 2015 they changed Akosha to Helpchat which was a personal assistant and they transformed it within one year to form Tapzo; so buddy you didn't fix on one thing, you just kept on pivoting the business frequently. In bringing such a frequent changes in business which are actually very significant, .
You have to do many alterations & planning in business; if you are bringing such a change which is completely pivoting. Moreover the management risk also increases, along with that if we see, then its not easy to do. Money can't solve all the problems; and money can't do this, it is very important to keep your mindset in such a way that you can run your business after pivoting. .
Cost of dynamism is very large, now what is this? This means the cost of changing the business frequently is quite high. First is your Operational Cost which increases when you change; second is Management cost, you have to make few changes in management as well. Third change is in the Fixed Cost, as you are changing the business center so your fixed cost changes; then there is training cost, .
Brother, you have to train employees as well. And finally Marketing which is the biggest expense & its cost increases when you pivot. And it became almost impossible to manage all these things together for this business. The next reason is Negative Cash Flow. Buddy, if the cash flow in the business is negative then how would a business sustain. There was no problem with the app, it was fantastic, I enjoyed .
Using it; but as I say Profit is never equal to cash flow; your books of account may show profits but this does not necessarily means that your cash flow is good. Cash flow means how much cash is in and how much cash is out. Your cash in flow should always be more than cash out flow; otherwise the business will shut down. 95% of start ups have 95% as the marketing expenses. So how would this work? .
They did not monitor the cash flow properly; didn't monitor the funds; you need to take care of 3 things, the first thing is that the funds and their breakdown that buddy how much & where your funds are used? Which are the highest expenses monthly? You have to breakdown it properly. Second factor is your cash in flow; that how much money is coming in the business? and how much is the growth of your business? .
So that there is probability of more money in future? You have to analyze the cash flow statement else everything can be spoiled, which they didn't do. Next reason is Follow Up Capital. Follow up means approach again and again, and capital means money. I will explain this in simple words, see, consider you have funds of Rs. 10 Crore, and your monthly cash out flow means your cash burn .
Is Rs. 1 Crore, so with this calculation life of your business is 10 months, although you are growing but still you can survive for 10 months with Rs. 10 Crore, if the burning rate is Rs. 1 Crore pm. So if we see from this perspective then they had very late alarm signals. They used to realize very late that they have to raise the capital. Initially they used to raise the capital but didn't .
Pay attention on cash flow, and when cash flow was on alert when funds were about to exhaust then they would feel the need of raising capital. And capital can't be raised instantly. So they raised total funds of around $ 34 Million during their entire tenure and their app was very nice; there was no problem at all, there used to be small glitches here and there but you can't solve all the problems with it, buddy. All your founders .
Should have the ability to sell the need. Means you have a need of funding then you should be able to sell it to investors as well. What does investor consider while investing? He considers two factors first is your trust and second is the vision of your company. Now see the trust issue was because of frequent pivoting; now you start one business & then keep on changing it then how would someone trust you? .
They raised Rs. 100 Crore in helpchat to develop a chatbot and they closed that within one year because they said scalability issue were there. When such things started happening and they closed products frequently & started again then investors had trust issues, buddy. Next reason is Negligence of Customer Centricism. This means to shift from customer centricism. When customer does not like the product .
Then what do companies usually do? They offer refund to the customers but refund is never the solution; one gets frustrated with refund; solution is Operational Excellence. Just improve your operations. If we talk about CRM which is quite famous nowadays; Customer Relationship Management; it's not just a software, people usually think that just install CRM software and everything will be done. .
It is not like that. CRM means you maintain regular relationship with customers, nurture them. They had so many complaints; around 500 to 4000 complaints out of which 35% were unresolved. And customer experience started deteriorating. If we talk about UI/UX design means their User Interface was quite good; I didn't face any problem with it till date; but after some point of time it was quite cluttered because they had .
Accommodated so many apps and it wasn't good. See there is a success formula in business, which is Operations over fame, customer over everything. Focus more on operations than the business fame. And give top priority to customers only then your business succeeds. Next reason is Fire Sell means to sell the company in hurry because of helplessness. They were very close to bankruptcy at that time, .
And Amazon had nicely captured the Indian market by then and was properly sustaining. Amazon was already the market leader by then. Afterwards Amazon launched its service called Amazon Pay for which Amazon was in big need of technical data of customers buying habits which was available with Tapzo. So Amazon acquired Tapzo and this acquisition was only for $ 40 Million. Now what is the twist here? .
Twist is they had raised the funding of $34 Million and it was sold out for $ 40 Million you must be thinking that if company is sold out then where was the actual failure? See, for this, understand three things Money, Time & Valuation. If we talk about the money then $34 Million were already in funding and the buyout was only for $40 Million and there was not profit as such. .
Time – the investors waited for such a long time, founders gave time but didn't receive any return comparatively; & the valuation for start up should have been above $ 100 Million, but that was not done Today the founders of start up are working as employees in Amazon because of this buyout and their situation has even worsened because if they had done something good earlier then it would have been better. Investors had no worries .
They got their money & exited. Hence this is a failed start up. I hope you would have enjoyed today's case study. Friends, many people want to reach out to me so follow me on instagram @adityasainiofficial. I will try to reply your DMs, if you have any query. If you have to ask anything, I have provided the link in the description, navigate there and follow me on Instagram. .
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